To franchise or not to franchise?
Investors considering franchise opportunities in the portable storage industry should run in the other direction. I have sat through this pitch a couple of times with two different companies, and when it was over, I felt like someone was trying to steal my money. It’s a horrible investment model, and they are setting up individuals (INVESTORS) for failure as they sink their teeth into, in most cases, 10% of your hard-earned revenue. These companies will pitch that they have the tools and brand recognition you need to succeed, but making such statements is truly inaccurate. To debunk their claims, there are various software tools to manage and operate a portable storage business successfully. Additionally, all but one franchise has the brand recognition in the industry that everyone desires, it’s the company that coined the phrase Portable On-Demand Storage (PODS). Therefore, you do not need to give up 10% or more of your hard-earned cash flow when these companies do not bring you the benefits they claim.
What is absurd about these companies trying to lure you into investing in their scam is that they strongly recommend spending 5% to 10% of your cash flow (not part of the royalty fee) on local marketing. Yes, that is correct; on top of investing in their franchise, they want you to build market recognition. So why do you need them versus being an independent portable storage operator? The simple answer is you don’t. Coming from a certified public accountant who practiced for years in Texas, the investment analysis would support the idea that investing in most franchise portable storage opportunities is a risky and horrible investment versus starting your business from scratch. See the investment analysis below on an investment of $546,000. Please note that these investment numbers are approximations based on our company’s continued investment in portable storage.
An IRR of 14% is not very good for a small business investment of over half a million dollars. For a small business that does not have the same access to capital as a larger organization, the risk is greater, and therefore, the IRR requirement for a sound investment may be higher. The potential reward (return on investment) for starting your own business as an independent portable storage operator is significantly better than investing in a portable storage franchise. I would be happy to share our knowledge of the portable storage business and walk through the financial analysis of an investment in a portable storage franchise compared to starting your own business as an independent operator.